The high cost of housing relative to income is a main cause of family poverty, says Hastings Budget Advisory Service co-ordinator Greta Wham.

"It is certainly a key cost along with food and electricity, but unlike food and electricity it is not something that can be easily economised on," she said.

Real estate firm Harcourts manages more than $200 million worth of residential property.

Managing director Kaine Wilson said the current median rent for three-bedroom homes was: Napier Central $360, Napier South $320, Taradale $350 and Hastings $290.


Property Brokers Hawke's Bay manager Paul Whitaker said there was steady pressure on rents.

"They are sneaking up quietly," he said.

"As interest rates go up the investor has to get that money back somewhere - a lot of the time the tenant pays for that."

He said investment interest in the Hawke's Bay market was also increasing and the market was overdue for an increase in values, which would increase difficulty for tenants.

Hawke's Bay was overdue for a price correction, but limited household incomes were holding it back, he said.

"If you look at housing affordability and when the booms have happened in the past 90 years, it is related to what percentage of an income a mortgage is.

"At the moment house prices are cheaper - they haven't gone up over the last seven years - but incomes haven't really risen either. We need more money in people's pockets."

The National Government has blamed the high price of housing in New Zealand on local councils limiting land for new developments, despite the country's culture of residential investment which received tax breaks.


"You should ask your local council what they are doing about land supply," Economic Development Minister Steven Joyce said on his last trip to Hawke's Bay.

Napier City Council development manager Johan Ehlers said the council did regular studies on residential land need.

About 200 new lots were needed each year, half supplied by infill housing and the balance through new developments.

Kent Terrace and Citrus Grove developments were identified in the District Plan and were complete.

Guppy Rd, Te Awa, Jervoistown and Parkland were under way. Park Island and Mission Estate were undeveloped.

Parklands was being developed by the council which always kept 15 to 20 sections for sale, he said.

"We are developing at the rate that the market dictates," he said.

"If there is a demand for sections we open up the next stage and if there is little or no demand we just hold back.

"In Napier there is no issue with supply and section prices are quite reasonable."

He said development costs imposed by council, to provide infrastructure for the development, was average compared with the rest of the country - about $20,000 per lot.

Section prices were unlikely to fall, he said, because housing development was "a very expensive business" and developers needed a return on investment.

In Hastings there are developments at Arataki in Havelock North and a Williams St/Northwood development and a Lyndhurst development have further consents pending.

Hastings District environmental policy manager Philip McKay said there were 93 freehold sections unbuilt on and 66 unit titles currently available.

"In addition to this there is another 21.49ha of residentially zoned land still to come on the market in terms of subdivided and available sections," he said.

For people who cannot afford market rentals there is social housing, with Housing New Zealand the biggest provider with market-related rents.

People must be able to show they have searched for suitable housing, be a citizen or permanent resident and meet an income and asset test.

The Ministry of Social Development (MSD) has recently taken over the management of applications for social housing and refers people to providers.

MSD Eastern Districts spokesperson Calvin Robinson said there were two waiting lists - urgent and "urgent urgent".

"We are in constant contact with people because circumstances change," he said.

"People on the B list may not be so urgent, unless their needs change - for example if there is a rheumatic fever situation with a child in damp house, then obviously if that comes to our attention they go on to the A list."

He said the length of the waiting lists would be known in July, when lists would be released breaking down figures into local government areas.

"We have been following your [Hawke's Bay Today] hardship stories in the last few days and we are certainly aware of the issues that have been mentioned on the last day or two, but far as the actual numbers we are not in a position to say at the moment. In July the data will be telling."